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Cornwall pitching a 4 per cent hotel tax

The economic development department is looking at imposing a new four per cent tax on hotel stays in Cornwall to fund tourism promotion. The owner of the Elect Inn 5 argued that raising prices by that much will hurt his business, on Tuesday February 13, 2018 in Cornwall, Ont.

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Following a trend found in many other Ontario municipalities, the City of Cornwall is contemplating the introduction of a new tax on hotel stays inside the city.

The economic development department is currently working on a proposal for a "Transient Accommodation Tax," the money from which would go towards tourism-promotion efforts. This would, ideally, end up providing more customers for the hotels as well as other economic benefits for other parts of the tourism industry in Cornwall.

The once-independent Cornwall and the Counties Tourism was recently absorbed by the municipality to become part of the economic development department. If council decides to impose the tax on all hotel stays in the city, it has the potential to pay for much of the work Tourism Cornwall does, and greatly reduce the money spent by the municipality.

"Most municipalities are moving towards (an accommodation tax). In Toronto you pay it; it's on the bill," said Mayor Leslie O'Shaughnessy. "That's the contribution from the sector towards the promotion of tourism."

Economic development division manager Bob Peters said his department has met with the province and most hotel owners in town about the implementation of an accommodation tax in Cornwall. A proposal will be brought to council for consideration in the next few weeks with the intention of having the tax in place by the middle of the year.

Having a fee added to hotel bills to help pay for tourism promotion is nothing new in Cornwall. Up until 2015 some local hotels charged a "destination marketing fee" to their customers. That agreement fell apart when one of the hotels pulled out.

"The big difference is all hotels will be participating in this, whereas before it was a voluntary fee," said Peters. "This would be straight across the municipality. A bylaw would be passed by council; money would be collected by the hotels and put to use by tourism use."

Scott Lecky of the Cornwall Ramada Inn was one of the hotel owners the city has talked to about the idea of having an accommodation tax. He supports the idea, citing the fact the destination marketing fee was also fairly successful while it existed. That being said, Lecky's support is on the conditional.

"These dollars need to go 100 per cent into tourism because the reality is with Cornwall and the Counties Tourism folding, we are not doing anything for tourism right now," he said.

Lecky also said the size of the tax is also very important. The economic development department is currently contemplating a four per cent accommodation tax, which would be in line with taxes in many other Ontario cities, such as Ottawa. The Ramada owner feels that figure is too high and would like to see it at two per cent.

"We have to be very careful because with the current economic environment we are in - what with the minimum wage going through the roof - hotels have had to adjust their rates. So we have to be careful about adding another cost," said Lecky. "Four per cent would be too much of a hit."

Although hotels like the Ramada Inn are cautiously supportive of the new tax and have even voluntarily charged it in years past, some small hotel and motel owners are balking at the idea having to charge it.

Rajender Pawria was not one of the hotel owners the economic development department has spoken to so far. He owns Elect Inn 5 on Brookdale Avenue and was shocked to hear of the city's proposal.

"We already pay enough taxes," exclaimed Pawria.

The fact he will not be the one paying the tax does not comfort him. The small motel owner notes that he already struggles to keep his room prices down in order to be competitive in the more affordable end of the hospitality industry.

His business eats the large fees charged to them by travel sites such as Booking.com and Expedia.ca, which can be as high as 15 per cent of the cost of the room. He does this so he can keep his prices lower than his competitors in order to attract travellers. A mandatory charge aimed at his customers will harm his business by raising the cost of the room.

"We cannot pass these costs onto our guests, because they will not like that," he said. "Four per cent is quite a lot."